flydubai to ‘pick up slack’ as other carriers go slow on Russian route

Flydubai is bullish on the Russian market despite the country’s economic woes, the airline’s chief executive said yesterday.

“For us, strategically speaking, the Russian market is very important,” said Ghaith Al Ghaith.

“Our view is not only for one month or two months. Our approach is much more strategic than short term.”

Flydubai said last month that it would launch flights to Novosibirsk, the most populous Russian city after Moscow and St Petersburg, and Nizhny Novgorod – the fifth-largest city in Russia – starting from October. The new destinations will bring the number of cities in Russia that flydubai services to 10.

Russia’s economy, which grew by just 0.6 per cent in 2014, is expected to enter a recession this year, owing to plummeting oil prices, a weak rouble and western sanctions. That has led to a dramatic decline in the number of Russian tourists visiting the UAE.

Russian passenger numbers through Dubai International Airport fell by more than 35 per cent in the year to February, according to airport data released in March.

Many airlines, such as Emirates, have reduced their capacity to Russia. Transaero, which was one of the largest carriers in the Russia-UAE market, has scaled down its operations.

Mr Al Ghaith said that creates an opportunity for “picking up the slack” from these airlines.

“On many of the routes that we operate in Russia, we are the only ones serving these routes. A lot of airlines withdrew. This gives us a little bit more, because there is less competition,” said Mr Al Ghaith.

In terms of route expansion, Mr Al Ghaith said that he would like to add three to four cities in Iran. But it is all subject to “government to government discussions to add more flights”. Currently flydubai operates to nine cities in Iran with 31 flights per week.

The chief executive said that the “aero-political situation” remains the biggest challenge in terms of expansion.

“Places like India and Pakistan are also underserved. An airline like us can double in size, if there was a more liberal approach,” he said.

Currently flydubai services 87 destinations.

Separately, Mr Al Ghaith said that his airline would “definitely operate from DWC in the future”. Asked if it would move before Expo 2020, he said: “for sure, 100 per cent.”

Mr Al Ghaith also said that flydubai is hedged for this year at around $70 per barrel, but the hedging is a “small percentage” or below 30 per cent.

Fuel hedging has been a common practice among airlines in recent years in light of rising energy prices. Typically, airlines sign contracts to buy fuel at a specific price range to protect themselves from excessive rises in oil prices. But now, as oil has lost a big chunk of its value since June 2014, airlines that hedged must delay buying cheaper jet fuel.

“The prices now are so comfortable. I think that it is better not to hedge, but we will watch the market,” said Mr Al Ghaith.


Share This Post